Saturday 10 November 2012

Obeid's Streetscape DOCA off to court

The council was not happy when
Ozem Kassem endorsed the Streetscape DOCA.
Photo: Cor Cordis
OZEM Kassem’s decision to vote for a Deed of Company Arrangement (DOCA) in favour of signage firm Streetscape Projects (Australia) Pty Limited could come under scrutiny as the deed is challenged in the courts.

City of Sydney Council, which is Streetscape’s largest creditor with a debt in excess of $17 million, has applied to have the DOCA set aside. A first directions hearing is scheduled for Monday, November 12.

Streetscape was placed in voluntary administration on June 21, 2012 by sole director, Moses Edward Obeid.

At a meeting of creditors on August 9, a numerical majority of creditors voted in support of the deed. However for a DOCA to be passed, a majority of the debt must also be voted in favour.

The Council, along with Telstra, ANZ and Abacus Property Group, were opposed, arguing Streetscape should be wound up and a liquidator appointed.

The deed document states that its objective is "to maximise the prospect of creditors receiving a dividend that exceeds the dividend they would receive if the Company were wound up".

As voluntary administrator presiding at the meeting, Kassem was entitled to use his casting vote to break the deadlock. By voting for the DOCA, he endorsed a deal that requires Streetscape to pay no more than 3c in the dollar.

The company's liability under the terms of the DOCA depends on the outcome of an appeal to be heard on November 26.

Obeid is appealing Justice Clifford Einstein's judgement handed down in the Supreme Court on February 1, 2012 ordering Streetscape to pay the council millions of dollars for allegedly selling so-called "smart poles" in breach of its contract.

With penalty interest accruing the figure has swelled to more than $17 million.

Lawyers for the council advised the NSW Supreme Court this morning they would file points of claim on Friday, November 23.

The points of claim should show what grounds the council believes it has to challenge either the terms of the DOCA or Kassem's decision to throw his casting vote for the DOCA as opposed to liquidation.

Meanwhile in the Federal Court the council’s creditors petition application is queued and due to reactivate early in the New Year if the Obeid's appeal fails. 

PPB's Scott Pascoe has agreed to act as trustee in bankruptcy to the estate of Moses Edward Obeid in the event the Council's creditors petition is successful. 

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